Updates prices to US afternoon trading

By Sinéad Carew and Sruthi Shankar

June 16 (Reuters) - The Nasdaq Composite and the S&P 500 lost ground on Tuesday under pressure from technology stocks, while the Dow Jones Industrial Average touched a record high and SpaceX surpassed Amazon's market value to become the fifth-most valuable U.S. company.

After rallying sharply on Monday on optimism about a U.S.-Iran peace deal, investors in the S&P 500 and the Nasdaq took a breather even as oil prices fell to their lowest levels since early March.

Shares of SpaceX SPCX.O climbed more than 10%, helping the AI and rocket company surpass Amazon's AMZN.O market value and briefly top Microsoft's value MSFT.O as its blistering surge continued after its initial public offering.

While falling oil prices offered some support to equities, Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia, said building on steep gains in the heavyweight technology sector was too difficult. Luschini said investors are cautious ahead of the U.S. Federal Reserve's policy update due on Wednesday afternoon.

"We had a big move yesterday in the market," said Luschini, alluding to the S&P 500's 1.65% rally on Monday and Nasdaq's advance of more than 3%. "We're just digesting some of those gains and the setup in anticipation of the Fed meeting is always a little tentative."

At 2:17 p.m. ET (1817 GMT), the Dow Jones Industrial Average .DJI rose 403.66 points, or 0.78%, to 52,074.69 after marking a record closing high on Monday. The S&P 500 .SPX lost 25.97 points, or 0.34%, to 7,528.32 and the Nasdaq .IXIC shed 155.22 points, or 0.58%, to 26,528.72.

TECHNOLOGY LAGS, FINANCIALS RISE

Investors rotated into economically sensitive sectors and sold richly valued technology stocks. Of the S&P 500's 11 major sectors, technology .SPLRCT was the biggest laggard, down 1.7%, while financials .SPSY was the biggest gainer, up 1.4%, followed by industrials' 1.2% advance.

Shares of JPMorgan Chase JPM.N climbed 3.4%, while Wells Fargo WFC.N added 1.8% and Bank of America BAC.N added 1.6%.

U.S. oil futures CLc1 slumped more than 6% as details of the U.S.-Iran interim deal emerged on Tuesday, with U.S. President Donald Trump saying it will rule out a nuclear weapon for Tehran and a U.S. official saying it allows Iran to sell oil upon signing.

The deal is expected to extend a tenuous ceasefire announced in April by another 60 days and reopen the Strait of Hormuz, which Iran has effectively blocked since the U.S. and Israel attacked Iran in February.

The war had pushed up oil prices and fanned worries about sticky inflation. Investors widely expect the Fed to hold interest rates at the 3.50% to 3.75% range on Wednesday, though they will pay close attention to new Fed Chairman Kevin Warsh's comments on inflation, unemployment and the economic outlook.

Traders see the Fed holding rates through much of the year while seeing a roughly 42% chance of a 25-basis-point rate hike in December, according to CME Group's FedWatch tool.

Shares of Olin OLN.N fell 6.4% after the chemical producer said it would acquire Huntsman HUN.N in an all-stock deal valued at $2.43 billion. Huntsman shares tumbled 16.7% as the offer stood at a discount to the stock's recent price.

Yum Brands YUM.N rose 1.9% after the fast-food company said it would sell its Pizza Hut chain for $2.7 billion, as it struggles with stiff competition and cautious consumer spending.

Advancing issues outnumbered decliners by a 1.21-to-1 ratio on the NYSE, where there were 280 new highs and 69 new lows. On the Nasdaq, 2,143 stocks rose and 2,610 fell as declining issues outnumbered advancers by a 1.22-to-1 ratio. The S&P 500 posted 22 new 52-week highs and three new lows.

The Nasdaq Composite recorded 73 new highs and 102 new lows.